Andy Grove and Michael Dell made major contribution to the field of technology. Not speaking to product contributions, but the effective management tools, leadership, poise and strategic thinking are perhaps their most impressive contributions to the field.
Andy Grove brought definition to the words “crises management,” and has forever changed the way organizations anticipate and recovery from potential destruction. Andy’s strategic approach and recovery plan has been his most effective contribution to the field. Andy believed that building experimentation into the everyday business would someday be reason for market share recovery. Similar to Michael, Andy also thought like an outsider as he formulated his new business strategy. That outsider approach was the turning point in Intel’s legacy.
Michael Dell forever defined consumer value. Michael understood that the consumer was the driving force of any successful business, and technology was no different. Often times when an organization produces a product in which there is very little contact with the customer, there is a loss of focus on the customer’s wants, needs and experience. Michael took pride in maintaining relationships with its most valuable asset, its customers. For example, as success forced the company to expand, Michael created silos (or customer teams) within the organization to maintain the personalized customer service approach. Valuing customer demand has proven to be the key contributor in the company’s success.
Both professionals encountered “strategic inflection points” (Krames, J.A. 2003). Strategic inflection points may include business competition, or a new channel of distribution. Strategic inflection points will cause change, and with change comes resistance.
During a price reduction in 2001, Dell sliced the prices of its computers. Why Dell knew that a reduction in price would not affect its business’s because of the quality of their product, its competitors were resistant. In fact, one competitor stated that it was a “dumb” move (Krames, J.A. 2003). Dell captured and mastered one part of the business that not many other organizations have, customer rapport. Dell was confident that it could engage in a pricing war because he always knew what the customer wanted. Dell knew that he would produce a better product than all of his competitors at that time. Although it seemed like a risk to cut prices, Dell had his competitor’s right where he wanted them.
Andy Grove faced resistance when he presented the notion that the organization would sunset the companies chip making past and embark on a new product. This is very difficult in most successful organizations. Leadership becomes complacent with products in which they experience success. Complacency proves dangerous as it does not allow time to anticipate competitor’s moves, market changes and the possibility to explore new products.
Andy’s new initiative would indeed cause plants to shut down resulting in major lay-offs across the organization and would require a major financial contribution. One could only imagine the amount of resistance that Andy received through out the decision making and communication process.
Andy kept a level of paranoia in his organization. Andy always wanted management to remain on their toes avoiding complacency. Andy also wanted to help his leadership team to understand the difference between organizational change and a major organizational shift, and he wanted his team to be prepared. Grove and Dell had a management skill that was not common in major organizations during that time. External resistance was almost a given, but internal resistance proved not to be a deterrent.
Management 101 techniques help to reduce internal resistance during very difficult company situations. Techniques include: Ensuring employees at all levels had contributed to the direction of the organization. From the intern at MIT to the executive team, Andy Grove ensured everyone had some level of contribution in the decision making phases of the business. Another basic-level management technique is effective communication. Concise, transparent, and consistent communication to all levels of the business is critical. Effective communication from the top to the bottom of the organization builds trust. When employees trust leadership, they are less resistant to change.
Similarities in Business Stories
One substantial similarity in business stories between Andy Grove and Michael Dell was the encounter of strategic inflection points. Both professionals were able to swiftly and strategically react. The ability for both leaders to think strategically and prepare the organizations to counter any challenge is one reason for both company’s sustainability and success.
Using external factors to help rebuild a brand was another similarity between Michael Dell and Andy Grove. Dell used his key asset to give him the boast needed to change directions as an organization. Dell wanted the customer to dictate the company’s next move. Utilizing customer feedback, Dell maintained a personal relationship with his consumers which allowed his organization to continue to produce a quality and high demand product.
Grove asked, “what would another CEO do if he were to walk into this organization” (Krames, J.A. 2003). Operating from an outsiders perspective, Andy was able to make the most difficult but successful decision in the organizations history in completing abandoning one product and implementing a new one.
It is extremely difficult for leaders in large organizations to set aside their own egos and take recommendations from a customers or lesser qualified individual. Michael and Andy decided that the success of the organization was not about their track record, salaries, or qualifications, but had everything to do with satisfying consumers and continuing to provide employment for the hard working individuals in which they employed.
There are not many differences between the two technology Moguls. However, one distinct difference was obvious. Michael Dell was able to forecast the shift in the market and build a fundamentally sound organization that could sustain in any declination in the market. Dell was never a company of stagnation, but constantly contemplated ideas to stay connected to the consumer. Dell thought that if he can constantly master that art, his organization would be ready to sustain any decline in the market.
Grove’s actions were different. Grove underestimated his competition and implemented a reactionary plan to restore the business versus proactively planning for any market shifts. Grove could have benefited from exploring various products to keep his business competitive. Although Grove’s plan of recovery was genius, the inflection points could have potentially been the demise of the organization.
There are numerous factors that may have impacted the success of Andy Grove and Michael Dell. Dell had a personal and professional factor that continues to propel the company to the number one distributor of PC’s in the United States, its mission statement. Dell’s mission was to be the most successful computer company in the world. Dell envisions success by delivering the best customized customer experience in markets they serve.
Political factors have a significant impact on both companies ability to remain successful. Government regulations set suit for the conditions in which organizations have to operate. This may not have a direct impact on Dell or Intel in the United States, but it does have an impact on business in other countries where there is a lack of political stability. Foreign countries have policies that make it very difficult to trade or invest.
Social and cultural factors also come into play. Marketing, promotional and pricing strategies must be creative due to the market saturation. Leadership in both organizations must have a firm understanding of the demand. This is why Michael Dell has and always will place the customer at the center of his universe. Understanding the consumer’s demand rather than developing business strategies to compete against a competitor or to simply generate more revenue has proven in both cases to be the recipe for success.